EXHIBIT 10.23
NEITHER THIS WARRANT NOR THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT
HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE
STATE LAW AND SUCH SECURITIES MAY NOT BE SOLD OR TRANSFERRED UNLESS (A) THERE IS
AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE STATE LAW
COVERING SUCH SECURITIES, OR (B) SUCH TRANSACTION IS EXEMPT FROM, AND NOT
SUBJECT TO, THE REGISTRATION REQUIREMENTS OF SUCH ACT AND APPLICABLE STATE
SECURITIES LAWS AND THE COMPANY RECEIVES AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO THE COMPANY STATING THAT SUCH SALE OR TRANSFER IS EXEMPT FROM
REGISTRATION, OR (C) THE COMPANY OTHERWISE SATISFIES ITSELF THAT SUCH SALE OR
TRANSFER IS EXEMPT FROM REGISTRATION.
No.______________
Issued: ________________, 0000 Xxxxxxx to purchase_______________
_________shares of Common Stock
(subject to adjustment)
CENTERSPAN COMMUNICATIONS CORPORATION
COMMON STOCK
PURCHASE WARRANT
THIS CERTIFIES THAT, for value received, ________________________(the "Holder")
is entitled to exercise this Warrant to purchase from the Company
_____________________(______________) fully paid and nonassessable shares of the
Company's Common Stock, $0.01 par value per share (the "Common Stock"), on the
terms and subject to the conditions set forth herein. The shares of Common Stock
issuable upon the exercise of this Warrant are referred to herein as the
"Warrant Shares." The number of Warrant Shares issuable upon exercise of this
Warrant and the Exercise Price (as defined below) are subject to adjustment as
provided herein. The term "Warrant" as used herein shall include this Warrant
and any warrants delivered in substitution hereof as provided herein.
1.1 TERM OF WARRANT
This Warrant may be exercised by the Holder at any time after ________________,
2002 and prior to the close of business on ________________, 2005.
1.2 EXERCISE PRICE
The Exercise Price at which this Warrant may be exercised shall be $10.67 per
share of Common Stock, as adjusted from time to time pursuant to Section 4
hereof.
1.3 METHOD OF EXERCISE
This Warrant may be exercised by the Holder, in whole or in part (but not for
less than 1,000 shares at a time, or such lesser amount then issuable upon the
full exercise of this Warrant), by delivering to the Company (a) this Warrant,
(b) cash, a wire transfer of funds or a check payable to the Company in the
amount of the Exercise Price multiplied by the number of shares for which this
Warrant is being exercised (the "Purchase Price"), and (c) the form of Election
to Purchase attached hereto as Annex A, duly completed and executed by the
Holder. This Warrant shall be deemed to have been exercised immediately prior to
the close of business on the date of its surrender for exercise as provided
above.
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2. DELIVERY OF STOCK CERTIFICATES
Within ten business days after the payment of the Purchase Price following the
exercise of this Warrant, the Company, at its expense, shall issue in the name
of the Holder (a) a certificate for the number of fully paid and nonassessable
Warrant Shares to which the Holder shall be entitled upon such exercise and
payment and (b) a new Warrant of like tenor to purchase up to that number of
Warrant Shares, if any, not previously purchased by the Holder if this Warrant
has not expired.
3. COVENANTS AS TO WARRANT SHARES
3.1 RESERVATION OF WARRANT SHARES
The Company shall at all times have authorized and reserve and keep available,
free from preemptive rights, for the purpose of enabling it to satisfy any
obligation to issue Warrant Shares upon the exercise of this Warrant, the number
of Warrant Shares deliverable upon full exercise of this Warrant.
3.2 ISSUANCE OF WARRANT SHARES
The Company covenants that all Warrant Shares shall, upon issuance thereof in
accordance with the terms of this Warrant, be (a) duly authorized, validly
issued, fully paid and nonassessable and (b) free from all liens, pledges,
charges and security interests created by the Company. The Company shall pay all
taxes and other governmental charges that may be imposed in respect of the
issuance or delivery of the Warrant Shares.
4. ADJUSTMENTS
4.1 ADJUSTMENTS OF EXERCISE PRICE AND NUMBER OF WARRANT
SHARES
The Exercise Price and the number of Warrant Shares issuable upon the exercise
of this Warrant shall be subject to adjustment from time to time as hereinafter
provided in this Section 4.
4.2 ADJUSTMENT OF EXERCISE PRICE UPON EXTRAORDINARY
COMMON STOCK EVENT
Upon the happening of an Extraordinary Common Stock Event (as defined below)
after the issuance date of this Warrant, the Exercise Price shall,
simultaneously with the happening of such Extraordinary Common Stock Event, be
adjusted by multiplying the then effective Exercise Price by a fraction, the
numerator of which shall be the number of shares of Common Stock outstanding
immediately prior to such Extraordinary Common Stock Event and the denominator
of which shall be the number of shares of Common Stock outstanding immediately
after such Extraordinary Common Stock Event, and the product so obtained shall
thereafter be the Exercise Price. The Exercise Price, as so adjusted, shall be
readjusted in the same manner upon the happening of any successive Extraordinary
Common Stock Event or Events.
Upon each adjustment of such Exercise Price pursuant to this Section 4.2, this
Warrant shall thereafter entitle the Holder to purchase, at the Exercise Price
resulting from such adjustment, the number of Warrant Shares obtained by
multiplying the Exercise Price in effect immediately prior to such adjustment by
the number of Warrant Shares issuable upon exercise of this Warrant immediately
prior to such adjustment, and dividing the product thereof by the Exercise Price
resulting from such adjustment.
"Extraordinary Common Stock Event" shall mean (x) the issuance of additional
shares of Common Stock (or other securities or rights convertible into or
entitling the holder thereof to receive additional shares of Common Stock) as a
dividend or other distribution on outstanding Common Stock of the Company, (y) a
split or subdivision of outstanding shares of Common Stock into a greater number
of shares of Common Stock, or (z) a combination of outstanding shares of Common
Stock into a smaller number of shares of Common Stock.
4.3 CAPITAL REORGANIZATION OR RECLASSIFICATION
If the Common Stock issuable upon the exercise of this Warrant shall be changed
into the same or a different number of shares of any class or classes of stock
of the Company, whether by capital
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reorganization, reclassification or otherwise (other than an Extraordinary
Common Stock Event), then and in each such event the Holder shall have the right
thereafter to exercise this Warrant for the kind and amount of shares of stock
and other securities and property receivable upon such reorganization,
reclassification or other change by holders of the number of shares of Common
Stock into which this Warrant might have been converted immediately prior to
such reorganization, reclassification or change, all subject to adjustment as
provided herein. In any such case, appropriate adjustment shall be made in the
application of the provisions of this Section 4 with respect to the rights of
the Holder after the reorganization, recapitalization or change to the end that
the provisions of this Section 4 (including adjustment of the Exercise Price
then in effect and the number of shares issuable upon exercise of this Warrant)
shall be applicable after that event as nearly equivalent as may be practicable.
4.4 NOTICE OF ADJUSTMENT
Whenever the number of shares of Common Stock or other stock or property
issuable upon the exercise of this Warrant or the Exercise Price is adjusted,
then and in each such case the Company shall promptly deliver a notice to the
Holder, which notice shall state the Exercise Price resulting from such
adjustment and/or the increase or decrease, if any, in the number of shares of
Common Stock or other stock or property issuable upon the exercise of this
Warrant, setting forth in reasonable detail the method of calculation and the
facts upon which such calculation is based.
4.5 OTHER NOTICES
In the event that the Company shall propose at any time:
(a) to declare any dividend or distribution upon its Common Stock,
whether in cash, property, stock or other securities, whether
or not a regular cash dividend and whether or not out of
earnings or earned surplus;
(b) to offer for subscription to the holders of its Common Stock
any additional shares of stock of any class or series or other
rights;
(c) to effect any reclassification or recapitalization of the
shares of its Common Stock outstanding involving a change in
the Common Stock; or
(d) to merge or consolidate with or into any other corporation, to
sell, lease or convey all or substantially all of its property
or business, or to liquidate, dissolve or wind up;
then, in connection with each such event, the Company shall send to the
Holder:
(i) at least 20 days' prior written notice of the date on which a
record shall be taken for such dividend, distribution or
subscription rights (and specifying the date on which the
holders of Common Stock shall be entitled thereto) or for
determining rights to vote in respect of the matters referred
to in (c) and (d) above; and
(ii) in the case of the matters referred to in (c) and (d) above,
at least 20 days' prior written notice of the date when the
same shall take place (and, if applicable, specifying the date
on which the holders of the Common Stock shall be entitled to
exchange their shares of Common Stock for securities or other
property deliverable upon the occurrence of such events).
5. FRACTIONAL SHARES
No fractional shares shall be issued upon the exercise of this Warrant. If any
fraction of a Warrant Share would, except for the provisions of this Section, be
issuable on the exercise of this Warrant (or any portion hereof), the Company
shall pay to the Holder an amount of cash equal to the then fair market value of
a Warrant Share multiplied by such fraction, computed to the nearest whole cent.
For purposes of the above calculation, the fair market value of a Warrant Share
shall be deemed to be the average of the closing bid and asked prices of the
Company's Common Stock as quoted on the Nasdaq National Market System or on any
exchange on which such Common Stock is then listed, whichever is applicable, for
the five trading days prior to the date of exercise of this Warrant.
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6. TRANSFERS
6.1 RESTRICTIONS ON TRANSFER
No Warrant Shares or any interest therein may be transferred unless (a) such
transfer is registered under the Securities Act of 1933, as amended (the
"Securities Act"), (b) the Company has received an opinion of legal counsel for
the Holder reasonably satisfactory to the Company stating that the transfer is
exempt from the registration requirements of the Securities Act, or (c) the
Company otherwise satisfies itself that such transfer is exempt from
registration.
6.2 TRANSFERS
The Company shall register on the books of the Company maintained at its
principal office the permitted transfer of this Warrant upon surrender to the
Company of this Warrant, with the form of Assignment attached hereto as Annex B
duly completed and executed by the Holder. Upon any such registration of
transfer, a new Warrant, in substantially the form of this Warrant, evidencing
this Warrant so transferred shall be issued, at the Company's expense, to the
transferee, and a new Warrant, in substantially the form of this Warrant,
evidencing the portion of this Warrant, if any, not so transferred shall be
issued, at the Company's expense, to the Holder.
7. REGISTRATION RIGHTS
(a) The Company shall notify the Holder in writing at least
thirty (30) days prior to filing any registration
statement under the Securities Act for purposes of
effecting a public offering of securities of the Company
(including, but not limited to, registration statements
relating to secondary offerings of securities of the
Company, but excluding registration statements relating to
any registration under Section 7(a) of this Warrant or to
any employee benefit plan or a corporate reorganization)
and will afford the Holder an opportunity to include in
such registration statement all or any part of the shares
issuable upon the exercise of this Warrant, subject to the
provisions of Section 7(d) below. If the Holder wants to
include in any such registration statement all or any part
of the shares issuable upon the exercise of this Warrant,
the Holder shall within twenty (20) days after receipt of
the above-described notice from the Company, so notify the
Company in writing, and in such notice shall inform the
Company of the number of shares of Common Stock the Holder
wishes to include in such registration statement.
(b) If a registration statement under which the Company gives
notice under Section 7(a) is for an underwritten offering,
then the Company shall so advise the Holder. In such
event, the right of the Holder to include any of the
shares issuable upon the exercise of this Warrant in a
registration pursuant to Section 7(a) shall be conditioned
upon the Holder's participation in such underwriting and
the inclusion of the Holder's shares of Common Stock in
the underwriting on the same terms and conditions as the
other participants in such offering, including, without
limitation, entering into an underwriting agreement in
customary form with the managing underwriter or
underwriters selected for such underwriting (including a
market stand-off agreement of up to 180 days if required
by such underwriters). Notwithstanding any other provision
of this Warrant, if the managing underwriter(s)
determine(s) in good faith that marketing factors require
a limitation of the number of shares to be underwritten,
then the managing underwriter(s) may exclude shares from
the registration and the underwriting, and the number of
shares that may be included in the registration and the
underwriting shall be allocated, first, to the Company,
second, to each holder of registration rights granted by
the Company before the issuance date of this Warrant that
contractually require the Company to include such holder's
shares on a priority basis, and, third, to the Holder and
any other holder of registration rights granted by the
Company (excluding those covered above), on a pro rata
basis based on the total number of shares of Common Stock
then sought to be included by each in such offering. If
the Holder disapproves of the terms of any such
underwriting, the Holder may elect to
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withdraw therefrom by written notice to the Company and
the underwriter(s), delivered at least ten (10) business
days prior to the effective date of the registration
statement. Any shares of Common Stock excluded or
withdrawn from such underwriting shall be excluded and
withdrawn from the registration.
(c) The Holder shall have no right to obtain or seek, nor
shall the Holder obtain or seek, an injunction restraining
or otherwise delaying any registration as the result of
any controversy that might arise with respect to the
interpretation or implementation of this Agreement.
8. LEGEND
Legends setting forth or referring to the applicable restrictions set forth in
Section 6.1 may be placed on this Warrant, any replacement hereof or any
certificate representing the Warrant Shares, and a stop transfer restriction or
order shall be placed on the books of the Company and with any transfer agent
until such securities may be sold or otherwise transferred in accordance with
Section 6.1.
9. HOLDER AS OWNER
The Company may deem and treat the holder of record of this Warrant as the
absolute owner hereof for all purposes regardless of any notice to the contrary.
10. NO SHAREHOLDER RIGHTS
This Warrant shall not entitle the Holder to any voting rights or any other
rights as a shareholder of the Company or to any other rights whatsoever except
the rights stated herein; and no dividend or interest shall be payable or shall
accrue in respect of this Warrant or the Warrant Shares, until and to the extent
that this Warrant shall be exercised.
11. GOVERNING LAW; CONSTRUCTION
The validity and interpretation of the terms and provisions of this Warrant
shall be governed by the laws of the State of Oregon. The descriptive headings
of this Warrant are inserted for convenience only and shall not control or
affect the meaning or construction of any of the provisions thereof.
12. LOST WARRANT CERTIFICATE
Upon receipt by the Company of satisfactory evidence of the loss, theft,
destruction or mutilation of this Warrant and either (in the case of loss, theft
or destruction) indemnification reasonably satisfactory to the Company or (in
the case of mutilation) the surrender of this Warrant for cancellation, the
Company will execute and deliver to the Holder, without charge, a new Warrant of
like denomination.
13. WAIVERS AND AMENDMENTS
This Warrant or any provision hereof may be amended or waived only by a
statement in writing signed by the Company and the Holder.
14. NOTICES
Any notice required by the provisions of this Warrant to be given to the Holder
shall be deemed given two days after being deposited in the United States mail,
postage prepaid and addressed to such Holder's address appearing on the books of
the Company. Any notice required by the provisions of this Warrant to be given
to the Company shall be deemed given three business days after being deposited
in the United States mail, postage prepaid and addressed to CenterSpan
Communications Corporation, 0000 XX Xxxxxxxxx Xxxxxxx, Xxxxx 000, Xxxxxxxxx, XX
00000, Attention: Chief Financial Officer, or at such other address as specified
in a notice delivered to the Holder as set forth above.
15. BINDING EFFECT
This Warrant shall be binding upon the Company and its successors and assigns,
and shall inure to the benefit of and be enforceable by the Holder and its
successors and permitted assigns.
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16. INVESTMENT INTENT, ETC.
By accepting this Warrant, the Holder represents that (a) the Holder is
acquiring this Warrant and the Warrant Shares issuable upon exercise hereof for
investment and not with a view to, or for sale in connection with, any
distribution thereof; (b) the Holder can bear the economic risk of an investment
in the Warrant Shares (including possible complete loss of such investment) for
an indefinite period of time; (c) the Holder understands that this Warrant and
the Warrant Shares have not been registered under the Securities Act, or under
the securities laws of any jurisdiction, by reason of reliance upon certain
exemptions, and that the reliance of the Company on such exemptions is
predicated upon the accuracy of the Holder's representations in this Section;
(d) the Holder is familiar with Rule 144 under the Securities Act, as currently
in effect, and understands the resale limitations that are or would be imposed
thereby and by the Securities Act on this Warrant and the Warrant Shares to the
extent such securities are characterized as "restricted securities" under the
United States federal securities laws inasmuch as they are acquired from the
Company in a transaction not involving a public offering; (e) the Holder has
received and reviewed a copy of each SEC Document (as defined below) and the
Holder believes the Holder has been given access to full and complete
information regarding the Company and has utilized such access to the Holder's
satisfaction for the purpose of obtaining information about the Company,
particularly, representatives of the Holder have had adequate opportunities to
ask questions of, and receive answers from, senior executives of the Company
concerning the Company and to obtain any additional information, to the extent
reasonably available, necessary to verify the accuracy of information provided
to the Holder about the Company; (f) the Holder is (x) an "accredited investor"
as such term is defined in Rule 501(a) under the Securities Act and as defined
pursuant to the provisions of state securities laws applicable to the Holder
providing for an exemption from registration or qualification of the offer and
sale of this Warrant and the Warrant Shares or (y) either alone or with the
assistance of the Holder's professional advisor, is a sophisticated investor, is
able to fend for his or herself in the transactions contemplated by this
Warrant, and has such knowledge and experience in financial and business matters
that the Holder is capable of evaluating the merits and risks of the prospective
investment in this Warrant and the Warrant Shares; (g) the Holder has obtained,
to the extent he or she deems necessary, his or her own professional advice with
respect to the risks inherent in the investment in this Warrant and the Warrant
Shares, the condition of the Company and the suitability of the investment in
this Warrant and the Warrant Shares in light of the Holder's financial condition
and investment needs; and (h) the Holder is a resident of the state (or if not a
natural person, the Holder made its investment decision with respect to this
Warrant and the Warrant Shares from its office located in such state) set forth
on the signature page of this Warrant.
As used herein, the term "SEC Documents" means, collectively, the following
documents of the Company filed with the SEC: (i) its Annual Report on Form 10-K
for the fiscal year ended December 31, 2001, (ii) its Quarterly Reports on Form
10-Q for the quarters ended March 31, 2002, June 30, 2002 and September 30, 2002
(iii) all Forms 8-K filed after the date of such Form 10-K, if any; and (iv) its
Definitive Proxy Statement dated April 19, 2002, for the annual meeting of the
Company's shareholders held on May 21, 2001.
17. ATTORNEYS' FEES
In the event any party is required to engage the services of attorneys for the
purpose of enforcing this Warrant, or any provision hereof, the prevailing party
shall be entitled to recover its reasonable attorneys' fees and any other costs
or expenses.
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IN WITNESS WHEREOF, the Company has executed this Warrant as of the date first
written above.
CENTERSPAN COMMUNICATIONS CORPORATION
By______________________________________
Name: Xxxxx X. Xxxxxxxx, Xx.
Title: Chief Executive Officer
The undersigned hereby confirms its
acknowledgements and representations
in Section 16 of this Warrant.
HOLDER
By:___________________________________
_________________________
SS# _____________________
State of Residency:
_________________________
_________________________
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ANNEX A
FORM OF ELECTION TO PURCHASE
To CenterSpan Communications Corporation:
The undersigned hereby elects to purchase ___________ shares of Common Stock of
CenterSpan Communications Corporation issuable upon the exercise of the within
Warrant, and requests that a certificate for such shares shall be issued in the
name of the undersigned holder and delivered to the address indicated below and,
if said number of shares shall not be all the shares which may be purchased
pursuant to the within Warrant, that a new Warrant evidencing the right to
purchase the balance of such shares be registered in the name of, and delivered
to, the undersigned at the undersigned's address stated below.
The undersigned hereby certifies to the Company that the undersigned's
representations set forth in Section 16 of the within Warrant are true and
correct on the date hereof as if made by the undersigned on the date hereof.
Payment enclosed in the amount of $_________________.
Dated:____________
Name of holder of Warrant:______________________________________________________
(please print)
Address:______________________________________________________
Signature: ___________________________________________________
